Loans For Unemployed
Loans For Unemployed
The pandemic has changed the very way that world works. Lockdowns, restrictions of food and beverage sales and scaling down of the workforce has meant that hundreds of thousands of people have lost their jobs or income over the past few weeks.
This is of extreme concern and most of these people are worried about how they are going to pay their bills, feed their families and cover any other expenses they may have until life returns to normal and they have a chance to earn an income again.
Relying on benefits or government schemes has proven largely ineffective. Registering for benefits takes time and with the increased burden on unemployment funds, most people simply aren’t receiving enough to survive on.
A good alternative is to apply for a short-term loan that will help cover costs and see individuals and families through this tough time. The problem is – how to get a loan for those who find themselves without a job.
Earning a stable income is one of the main qualifying criteria to be approved for a loan through regular banking and other financial institution. They require proof of income (in the form of payslips or bank statements) for a period of at least 3 months to confirm an income. The income is then used to determine the following:
- What the amount of the personal loan should be?
- How much income is available after expenses?
- Will the repayments be affordable relevant to the available income?
Without an income, a loan provider simply cannot be sure that a borrower has the means to repay the loan. They also cannot determine how much to lend and what repayments will be affordable to the borrower.
Unemployed people therefore find it difficult or nearly impossible to lend money through traditional loan providers because they do not have proof of a stable income. However, this does not mean that there aren’t financial solutions available to the unemployed to get some much-needed cash at a time when they might need it most.
The following are some of the ways in which to apply for a loan when there is no proof of income:
Loan providers will often approve a loan if the borrower can provide some sort of security called collateral. Collateral is an asset that has the same or similar value to the loan amount including interest and other charges. For example, a house or car can stand as collateral for a loan.
If the loan is not repaid according to the repayment schedule, the loan provider may claim the collateral (asset) and sell it to recover their funds. Collateral therefore provides surety to the lender that they loan will be repaid whether the borrower is earning an income or not.
Unfortunately, if there is no collateral available, this is not an option to apply for a loan while unemployed.
Surety is another way to secure a loan when unemployed. Surety is where another person, usually in good financial standing, cosigns the loan application. This person will become responsible for making the repayments on the loan or paying the entire outstanding debt if the loan goes into default. A loan goes into default when repayments have not been made according to the terms and conditions of the loan.
For example, if a repayment is late by more than 30 days or the borrower has missed 2 or 3 payments, the person who cosigned the loan will be contacted and become responsible for making the late payments and may even be required to repay the loan in full depending in the conditions of the loan agreement. If the co-signee is unable to meet this financial obligation, they can be sued for the amount or their assets claimed.
If this happens, the co-signee can reclaim their losses from the original borrower. While this is a very good way to get a loan approved while unemployed, it can be difficult to find someone who is willing to cosign a loan agreement and take on the financial responsibility.
MyBorrowing provides short-term loans for people who find it difficult to qualify through regular lending channels. We understand how difficult it can be for those who need cash in a hurry to be approved for a loan when they need it most. Especially those who find themselves in a position where they cannot provide proof of a stable income.
To qualify for a loan through MyBorrowing.com.au, the following simple requirements need to be met for those who are currently unemployed:
- You need to be a resident in Australia.
- You need to be at least 18 years old.
- You need to have a bank account for at least 3 months.
- You need to provide contact details and a residential address.
- You need to provide some form of evidence of how you intend to repay the loan.
That’s all you need to fill in the application form that can be found at https://apply.myborrowing.com.au/mb/apply.
What type of evidence can be provided for how the loan will be repaid?
There are many types of income that may qualify you for a loan from MyBorrowing. As long as the income you are receiving is sustainable and regular, we can assist you in getting a loan approved. Income can take the following forms:
- Unemployment benefits that get paid into your back account.
- Cash that is received from casual work or labour and is paid into a bank account.
- Invoices for individuals who are offering their services on a self-employed basis.
- Income that is received from any other stable means.
We will require your banking details in order to confirm and evaluate your income. Remember that we need this information so that we can determine how much you can borrow and the repayments that you can afford.
What defines a regular income?
An amount that is paid into your bank account or to you on a regular basis. This can be daily, weekly, monthly and so on. If you are receiving cash payments, it is recommended to pay these into your bank account. This will help us to more accurately assess how much you are earning and your ability to repay a loan.
What defines a sustainable income?
A sustainable income is earnings that aren’t going to dry up or disappear in a couple of weeks or months. In other words, an income that you will keep earning, preferably for the entire term of the loan. For short-term contracts or income generation over a short period of time, the terms may be adjusted in order for the loan to be approved.
What is the term of loan?
The term of a loan refers to the duration of the loan – how long you need to make repayments for the entire loan amount to be settled. Short-term loans from MyBorrowing generally last anywhere from 4 weeks to 24 weeks (1 month to 6 months). The longer the term (repayment period), the lower the monthly installments will be but the more you will pay in fees and other charges.
It is always recommended to only take out a loan in the amount that you need and choose the shortest repayment period in order to pay the loan off as quickly as possible and avoid additional charges and fees.
To find out more about short-term or personal loans, visit https://www.canstar.com.au/personal-loans/short-term-personal-loan/.
What are the additional fees and charges?
MyBorrowing applies the following fees and charges to provide and service a loan:
- 20% Loan Establishment Fee which will be added to your *principal loan amount. So if you borrow $100, the Establishment fee will be $20. You now owe $120.
- 4% monthly fee that is calculated over the term (repayment period) of the loan. So if you borrow $100, the monthly fee will be $4 multiplied by 6 months which equals $24. You now owe $144.
- $20 for payments that are not made in time. To avoid this penalty, give us a call to make alternative arrangements if you know the funds will not be available in your bank account. We understand the financial pressure of being unemployed and want to prevent having to charge you anything extra.
* The principal loan amount is the amount that you applied for and received without any additional charges or fees added.
How much can you borrow?
As mentioned above, your income will be used to determine the loan amount relative to how much you can afford to repay according to the terms and conditions of the loan agreement. MyBorrowing offers loan amounts ranging anywhere from $500 to $10,000.
However, it is important to remember that it is up to you to ensure that you are able to afford the repayments relative to the income you are receiving while you are unemployed. Use our free loan calculator to estimate the repayments over your chosen repayment period.
Sometimes it is best to work backwards in determining a loan amount that you can afford. Draw up a budget detailing all your expected income and expenditure over your selected repayment period. Deduct your expenses from your income and you will arrive at an amount that is available to pay towards the loan every month. Leave yourself some room and don’t apply this entire amount towards your repayments. Now multiple your chosen repayment amount by the repayment period you have selected and you will have the amount that you should apply for. Remember to include the Establishment and Monthly fee.
For more information on how to do a budget, visit http://www.moneyhelp.org.au/tools-tips/fact-sheets/preparing-a-budget/.
What if you have a bad credit record and are unemployed?
Although MyBorrowing does run credit checks, we are not as stringent in using this as a criterion to approve a loan. We aren’t going to scrutinize every loan or credit arrangement you have had in the past. But at the same time, we do want to be sure that you have been able to meet your financial obligations to other creditors in the past.
Additional Benefits Of Loans For The Unemployed
MyBorrowing understands the urgency that often comes along with applying for a short-term loan when you are unemployed. We guarantee that your loan application will be processed in just 24 hours and that the funds are paid into your bank account as soon as possible.
Our flexible repayment schedule is designed specifically to lighten the load by allowing you to pay weekly. Repayments can be scheduled according to when you receive an income to ensure that there is money in the bank. If you find bi-weekly or monthly payments more convenient, we can accommodate your needs.
Simply visit https://apply.myborrowing.com.au/mb/apply now to complete the application form and start the process to getting much needed funds in your bank account. Alternatively, give MyBorrowing a call on 1800 825 805 to find out whether your income is sustainable and regular enough to qualify for a loan.